The emergence of a concept
6. Private retail standards and the law of the World Trade Organisation
6.4 Private standards and the WTO SPS Committee
The SPS Agreement strikes a balance between the right of Members to protect human, animal and plant life or health and trade rules they have committed themselves to. Each WTO Member country is entitled to maintain a level of protection it considers appropriate to protect life or health within its territory.
But when SPS measures directly or indirectly affect trade, members have the obligation to minimise negative impacts of such measures on international trade.
This means that SPS measures must:
• be applied only to the extent necessary to protect life or health and not be more trade restrictive than required;
• be based on scientific principles and not be maintained without sufficient scientific evidence; and
• not constitute arbitrary or unjustifiable treatment or a disguised restriction on trade.
The preferred way of meeting the core principle of scientific justification is through the use of internationally developed food safety, plant and animal health protection standards – that is, those adopted by the Codex, IPPC and the OIE.
The harmonisation of national requirements, on the basis of these international standards, facilitates trade by reducing the proliferation of distinct national requirements. The SPS Agreement allows only for national standards or measures beyond the above mentioned international standards if they can be justified on the basis of an appropriate risk assessment and if they meet the criterion of least trade restrictiveness to achieve the desired level of health protection.
The SPS Agreement also requires in Annex C that there be no unjustified costs in testing, certification or approval procedures, to ensure that these do not function as barriers to trade. Furthermore SPS measures or standards of individual WTO members need to be notified via the WTO secretariat to other members. Finally, the WTO agreement ensures that SPS requirements can be challenged by other trading partners, through the use of the WTO’s dispute settlement mechanism.
While public SPS measures and standards need to fit the above mentioned criteria, private standards which address a mix of SPS and other objectives – including social and environmental concerns that are not related to food safety or plant/animal health protection – may have no scientific justification and may not be notified in a timely fashion. Together with a proliferation of the schemes without much harmonisation between them, it is understandable, that governments and international organisations get curious about the relationship between private standards and the standards set by the so called three sisters (OIE, CODEX, and IPPC).
Private retail standards and the law of the World Trade Organisation
The Committee on Sanitary and Phytosanitary Measures (SPS Committee) monitors the way Members implement their SPS-measures. If this is not done in conformity with the rules of the SPS Agreement and the measures affect trade, other Members can bring this up for discussion in the Committee (under the agenda item: specific trade concerns), which meets three times a year at WTO headquarters in Geneva.
The issue of private standards was introduced at the WTO as a specific trade concern by St. Vincent and the Grenadines complaining at a meeting of the June 2005 SPS Committee about the negative impact on its banana exports of EurepGAP (now GlobalGap) standards for pesticides. The European Commission rejected the complaint by stating that it did not concern any official requirement of the EU. After that however the issue of private standards has been on the agenda of the Committee as a general issue, not pointing to one specific WTO-member.266 The discussions so far have focused on three main concerns:267
1. Market access. It is acknowledged that private standards can help producers and traders by providing step-by-step guidelines showing what needs to be done to meet (government) regulations and market conditions. Several studies have shown that following the risk management approach defined by some of the private standards schemes results in better overall farm and business management as well as increased efficiency and profitability. However it is also recognised that these standards can have negative effects. Producers must be certified as meeting the private standards, and becoming certified is a very expensive business. Also it is argued that private standards can be both more restrictive (e.g. requiring lower levels of pesticide residues) and more prescriptive (accepting only one way of achieving a desired food safety outcome) than official import requirements, thus acting as additional barriers to market access.
2. Development. The costs of certification and compliance with private standards, can make the development of export-oriented schemes virtually impossible for small-scale producers in developing countries.
3. WTO law. While some are of the view that setting standards for the products they purchase is a legitimate private sector activity with which governments should not interfere, others are of the view that the SPS Agreement makes governments in importing countries responsible for the standards set by their private sectors. The latter maintain that the private standards do not meet WTO requirements such as transparency and scientific justification of food safety measures and are more trade-restrictive than necessary to protect health.
266 Stanton, G.H. and Wolff, C., 2008. Private voluntary standards and the World Trade Organisation (WTO) Committee on Sanitary and Phytosanitary Measures. Fresh Perspectives 2008.
267 WTO, 2007. Private standards and the SPS Agreement, note by the Secretariat of 24 January 2007.
Committee on Sanitary and Phytosanitary Measures, WTO Doc. No. G/SPS/GEN/746.
WTO Members have had numerous debates on what problems private standards can potentially cause (some members identified concrete examples) and whether and how the SPS committee should deal with this phenomenon. The tendency is to focus on discussing the scope of the SPS Agreement (under point 3 above).
A number of Members (mostly developing countries) follow the interpretation that the SPS Agreement is applicable to private standards while other Members (mostly developed countries) deny the applicability beyond public standards or government regulations. A discussion essentially concerned with the interpretation of the scope of Article 13 of the SPS Agreement. In June 2010 the SPS committee identified possible actions regarding SPS related private standards.268
Article 13 of the SPS Agreement indicates that:
Members are fully responsible under this Agreement for the observance of all obligations set forth herein. Members shall formulate and implement positive measures and mechanisms in support of the observance of the provisions of this Agreement by other than central government bodies.
Members shall take such reasonable measures as may be available to them to ensure that non-governmental entities within their territories, as well as regional bodies in which relevant entities within their territories are members, comply with the relevant provisions of this Agreement. In addition, Members shall not take measures which have the effect of, directly or indirectly, requiring or encouraging such regional or non-governmental entities, or local governmental bodies, to act in a manner inconsistent with the provisions of this Agreement. Members shall ensure that they rely on the services of non-governmental entities for implementing sanitary or phytosanitary measures only if these entities comply with the provisions of this Agreement.
The perception of most WTO Members in the SPS committee is that private standards go beyond the standards set up by international standard setting bodies that are referenced in the SPS Agreement. The question is then: what is meant by ‘going beyond’? The private standards extend to ethics, environment, animal welfare and social accountability and they are much more specific about how to structure the production process.269 Looking purely at the SPS aspects however there is little proof of many private standards going beyond public standards in terms of setting, for example, higher maximum residue levels.270 Strictly speaking from an SPS point of view in most cases there would be no interference with the
268 WTO, 2010. Possible actions for the SPS Committee regarding SPS-related private standards.
Committee on Sanitary and Phytosanitary Measures, G/SPS/W/247/Rev.2.
269 Henson, S.J. and Humphrey, J., 2009. The impacts of private food safety standards on the food chain and on public standard-setting processes. Paper prepared for FAO/WHO, ALINORM 09/32/9D-Part II, Codex Alimentarius Commission, Rome, Italy, p. 12.
270 Rau, M.L., 2009. Public and private standards and certification in agri-food trade. Small assignment report prepared for the Ministry of Agriculture, Nature and Food Quality, The Hague, the Netherlands.
Private retail standards and the law of the World Trade Organisation
international standards as it seems that in most cases private standards take the official national requirements or standards, or the international standards as a basis to build upon.271 If you look at for example the Codex Alimentarius Hygiene Code, which is very broad, it is only logical that private entities implement this Code with specific regulations for their industry.272
While the debate in the SPS committee focuses mainly on the question whether the scope of private standards go beyond the scope of public international standards, the discussion should better be driven by concerns about ‘real’ issues such as the costs of compliance, proliferation without enough harmonisation between the standards, transparency and the lack of stakeholder involvement.
Some of the private standard setting bodies have themselves recognised the problem of proliferation and efforts are now underway to ‘benchmark’ or accept other private standard schemes as equivalent. The Global Food Safety Initiative (GFSI)273 is playing an active role in this. GlobalGAP is a good example of a private standard setting body that has developed initiatives to ensure stakeholder inclusiveness, and has taken into account the specific needs of smallholders in defining their own standards. For example it has appointed an ‘Ambassador’ for Africa. They also work with committees with representatives from different sectors.274 Obviously private standards give rise to concern, but the question is whether the SPS committee is addressing these concerns in the right way. By focussing too much on applicability of the SPS Agreement, WTO members risk wasting their time without progressing in any way towards solving real questions.